Long-Term DIY Investing: A Back to Basics Warning

By: Joseph Russo | Fri, Mar 21, 2014
Print Email

Caution Warranted for long-term SPY-Bulls & GLD/SLV bears

Roll the Buy Hold Sell Dice

If you're in it for the long haul -- by that we mean bullish SPY and hedging your stack being short GLD/SLV -- good for you, so are we. How'd you do it, did you just get lucky, or did you use a specific model or investment strategy? We never seem to be very lucky when it comes to shooting from the hip with that sort of stuff; we do however follow a concise long-term timing model that in hindsight, makes us seem rather lucky, but we're really not. We're just your average Joe's around here.

As far as investing for the long haul goes, it's simply not good enough to have a retirement/brokerage account for savings with some funds or ETF's, and think that once you fund and regularly add to those accounts, that you can just sit back and let the long haul do its thing for you. Same thing goes for guarding that stack of physical bullion you're sitting on for insurance.

If that sounds like it's anywhere close to your investment philosophy, you are light-years away from mission accomplished. Not to worry though, we'll show you how you can travel at the speed of light toward changing that.

Sure, the average self-directed DIY investor does not have the time or tenacity to learn how to manage their general exposure to risk effectively, and far worse, many use the excuse that they don't have time - or really need to for that matter, because the markets always go up over the long haul anyway. At least that's how they've always understood their investments would ultimately pay off.

Okay, so you're keeping it simple you say, you've invested in a low cost index fund/ETF that will match the performance of the S&P, a feat that professional money managers are rarely able to accomplish. Check. In addition, you likely have some precious metals on hand to insure against perpetual inflation. Check. How could you go wrong with this basic plan?

So far so good, truly, this is a good DIY start, but what if the benchmark remains flat or goes down for a decade or more? Are you still okay with matching the benchmarks even though it may be a losing proposition? What do you do if metals experience a cyclical bear market despite all the government-sanctioned inflation?

Do you really think you can get away with simply holding and hoping? If you do, you certainly won't be alone in the loser's circle when the basic plan cracks; after all, you've matched a failing benchmark and though you still have your stack in tow, how do you know for sure what it's going to be worth over time. What kind of consolation is that, not being alone in the camp of steep losses and uncertainty?

You got questions - we got answers. Though it takes some doing, you can figure out how to get on top of this challenge on your own, we did, and we have no rocket scientists in the family either. Sheer tenacity is what it takes. Everyone has it - so long as they are determined to find it within.

S&P 500 Long-Haul chart

Listen, it's your hard-earned money, do what you will with it. We're just saying that if you gave it a bit of effort; say as much tenacity as it may take to learn how to navigate facebook or twitter, we'd bet that's all it would take to get you on a sustainable track of navigational success.

Once you put in the effort, you sleep far better at night, and you never have to wonder whether you should reverse course, pull your money out of the market, add to positions, do a little hedging, or stand pat and let everything ride.

For the majority of typical DIY investors, having a simple-to-follow and concise strategy for timing the market is essential for long-term investment success. If your timing model is sound, over the course of your investment life, you will consistently find yourself in the winner's circle, but if your model (or reactionary gut feel) is off kilter, the markets will repeatedly punish and destroy you financially over time.

By first developing then diligently following a proven long-term investment model, savers and investors can rest assured that they will achieve a level of performance equal to or far surpassing that of the S&P 500 benchmark regardless of what it does.

However, despite what anyone tells you, you cannot pick tops and bottoms; but you can most definitely time trend movements within markets rather effectively. All you need is an effectively modeled strategy with very clear rules and alerts, and the discipline to monitor and act upon the signals generated when they occur.

One of the easiest and most efficient ways to quantify the most basic long-term trends is to measure and diligently observe the relationship of prices and their historical reactions to a specific moving average or set of moving averages. That's pretty basic stuff.

Sure, it's boring and rather monotonous, I mean who has the time, discipline, and patience to figure out which set of variables best quantifies the historical long-term trends inherent in any given market - and then dutifully monitor the day-to-day, month-to-month, and year-to-year status of those variables. We can virtually guarantee you that the average DIY investor, though fully capable of such tasks, has no such inclination.

We mentioned earlier not to worry, that we'd share with you a short cut that would ramp you up to muster at the speed of light, and we meant it. We suspect you can guess where we're going with this, right. Wouldn't it be grand if you could just tap into someone else's working model, and just follow that?

Sure would, though you might think it would cost an arm and leg, taking all the potential benefit off the table. Think again. We have these models on autopilot, which means they are set up to alert us well in advance of potential changes in long-term trends. As such, it costs us next to nothing to share those alerts with anyone caring to follow along.

Of course, the bigger your stake the more value there is to such a service however, any portfolios of 10K or more would definitely be justified in forking over $99 bucks a year in administrative fees to tag along with us on this steadfast journey toward success. Just say the word, and we'll put you on board in a flash.

Revere Long-Term Trend Monitor

Until Next Time,

Trade Better / Invest Smarter

 


 

Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

Copyright © 2006-2014 Joseph Russo

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/